BUSI 601 Liberty University Contemporary Management Discussion

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DISCUSSION BOARD FORUMS INSTRUCTIONS In the first module/week, submit a thread of 300–400 words directly addressing the forum prompt. In your threads, synthesize course material and demonstrate critical thinking, graduate-level writing skills, and mature reflection. Cite the textbooks and scholarly articles from professional accounting and business journals. Use at least 3 journal articles for the Forum. Adhere to current APA format in all posts. Note that management techniques must not be capitalized. Select a well-known company with which you have some familiarity (specify the type of industry). Then, select 1 of the contemporary management techniques listed in Chapter 1 of the Blocher et al. text. Why and how do you feel that the contemporary management technique selected would be a positive force in helping the company achieve its critical success factors? Do not discuss a technique you already know the company is using. The first 6 methods focus directly on strategy implementation: 1. 2. 3. 4. 5. 6. The balanced scorecard and strategy map, Value chain, Activity-based costing and management, Business analytics, Target costing, Life-cycle costing. The next 7 methods help to achieve strategy implementation through a focus on process improvement: 1. 2. 3. 4. 5. 6. 7. Benchmarking, Business process improvement, Total quality management, Lean accounting, The theory of constraints, Sustainability, Enterprise risk management. Contemporary Management Techniques: The Management Accountant’s Response to the Contemporary Business Environment LO 1-3 Explain the contemporary management techniques and how they are used in cost management to respond to the contemporary business environment. Management accountants, guided by a strategic focus, have responded to the six changes in the contemporary business environment with 13 methods that are useful in implementing strategy in these dynamic times. The first 6 methods focus directly on strategy implementation: the balanced scorecard and strategy map, value chain, activity-based costing and management, business analytics, target costing, and life-cycle costing. The next 7 methods help to achieve strategy implementation through a focus on process improvement: benchmarking, business process improvement, total quality management, lean accounting, the theory of constraints, sustainability, and enterprise risk management. Each of these methods is covered in one or more of the chapters of the text. The Balanced Scorecard (BSC) and Strategy Map Strategic information using critical success factors provides a road map for the firm to use to chart its competitive course and serves as a benchmark for competitive success. Financial measures such as profitability reflect only a partial, and frequently only a short-term, measure of the firm’s progress. Without strategic information, the firm is likely to stray from its competitive course and to make strategically wrong product decisions—for example, choosing the wrong products or the wrong marketing and distribution methods. To emphasize the importance of using strategic information, both financial and nonfinancial, accounting reports of a firm’s performance are now often based on critical success factors in four different perspectives. One perspective is financial; the other three are nonfinancial: 1. Financial performance. Measures of profitability and market value, among others, as indicators of how well the firm satisfies its owners and shareholders. 2. Customer satisfaction. Measures of quality, service, and low cost, among others, as indicators of how well the firm satisfies its customers. 3. Internal processes. Measures of the efficiency and effectiveness with which the firm produces the product or service. 4. Learning and growth. Measures of the firm’s ability to develop and utilize human resources to meet its strategic goals now and into the future. An accounting report based on the four perspectives is called a balanced scorecard (BSC). The concept of balance captures the intent of broad coverage, financial and nonfinancial, of all factors that contribute to the firm’s success in achieving its strategic goals. The balanced scorecard provides a basis for a more complete analysis than is possible with financial data alone. The use of the balanced scorecard is thus a critical ingredient of the overall approach that firms take to become and remain competitive. An example of a balanced scorecard is shown in Exhibit 1.4. The strategy map is a diagram that links the various perspectives in a balanced scorecard. For many companies, high achievement in the learning and growth perspective contributes directly to higher achievement in the internal process perspective, which in turn causes greater achievement in the customer satisfaction perspective, which then produces the desired financial performance. The strategy map is therefore a useful means in understanding how improvement in certain critical success factors contributes to other goals and to the ultimate financial results. We cover the balanced scorecard and strategy map throughout the text, particularly in Chapters 2, 12, 18, and 20. Page 13 The Value Chain The value chain is an analysis tool organizations use to identify the specific steps required to provide a competitive product or service to the customer. In particular, an analysis of the firm’s value chain helps management discover which steps or activities are not competitive, where costs can be reduced, or which activity should be outsourced. Also, management can use the analysis to find ways to increase value for the customer at one or more steps of the value chain. For example, companies such as General Electric, IBM, U-Haul, and Harley-Davidson have found greater overall profits by moving downstream in the value chain to place a greater emphasis on highvalue services and less emphasis on lower-margin manufactured products. A key idea of value-chain analysis is that the firm should carefully study each step in its operations to determine how each step contributes to the firm’s profits and competitiveness. The value chain is covered in Chapters 2, 13, and 17. Financial Measures of Success Nonfinancial Measures of Success Sales growth Customer Satisfaction Earnings growth Market share and growth in market share Dividend growth Customer service (e.g., based on number of complaints) Bond and credit ratings On-time delivery Cash flow Customer satisfaction (customer survey) Increase in stock price Brand recognition (growth in market share) Internal Processes Product quality Manufacturing productivity Cycle time (the time from receipt of a customer’s order to delivery) Product yield and reduction in waste Learning and Growth Competence of managers (education attained) Morale and firm-wide culture (employee survey) Education and training (training hours) Innovation (number of new products) EXHIBIT 1.4 THE BALANCED SCORECARD: FINANCIAL AND NONFINANCIAL MEASURES OF SUCCESS Activity-Based Costing and Management Many firms have found that they can improve planning, product costing, operational control, and management control by using activity analysis to develop a detailed description of the specific activities performed in the firm’s operations. The activity analysis provides the basis for activity-based costing and activity-based management. Activity-based costing (ABC) is used to improve the accuracy of cost analysis by improving the tracing of costs to products or to individual customers. Activity-based management (ABM) uses activity analysis and activity-based costing to help managers improve the value of products and services and increase the organization’s competitiveness. ABC and ABM are key strategic tools for many firms, especially those with complex operations or diverse products and services. ABC and ABM are explained in Chapter 5 and then applied in several of the chapters that follow. Business Analytics Business analytics (BA) (also called predictive analytics) is an approach to strategy implementation in which the management accountant uses data to understand and analyze business performance. Business analytics often uses statistical methods such as regression or correlation analysis to predict consumer behavior, measure customer satisfaction, or develop models for setting prices, among other uses. BA is best suited for companies that have a distinctive capability that can be derived from measurable critical success factors. BA is similar to the BSC because it focuses on critical success factors; the difference is that BA uses analytical tools to develop predictive models of core business processes. A 2016 survey by the public accounting firm EY found that 57% of finance leaders saw business analytics as critical for the finance function (http://www.ey.com/ul/en/accountinglink/publications-libraryoverview). BA is covered in Chapter 8. Page 14 Target Costing Target costing is a method that has resulted directly from the intensely competitive markets in many industries. Target costing determines the desired cost for a product on the basis of a given competitive price, such that the product will earn a desired profit. Cost is thus determined by price. The firm using target costing must often adopt strict cost reduction measures or redesign the product or manufacturing process to meet the market price and remain profitable. Target costing forces the firm to become more competitive, and, like benchmarking, it is a common strategic form of analysis in intensely competitive industries where even small price differences attract consumers to the lower-priced product. The camera manufacturing industry is a good example of an industry where target costing is used. Camera manufacturers such as Canon know the market price for each line of camera they manufacture, so they redesign the product (add/delete features, use less expensive parts and materials) and redesign the production process to get the manufacturing cost down to the predetermined target cost. The automobile industry also uses target costing. Target costing is covered in Chapter 13. Life-Cycle Costing Life-cycle costing is a method used to identify and monitor the costs of a product throughout its life cycle. The life cycle consists of all steps from product design and purchase of materials to delivery and service of the finished product. The steps typically include (1) research and development; (2) product design, including prototyping, target costing, and testing; (3) manufacturing, inspecting, packaging, and warehousing; (4) marketing, promotion, and distribution; and (5) sales and service. Cost management has traditionally focused only on costs incurred at the third step, manufacturing. Thinking strategically, management accountants now manage the product’s full life cycle of costs, including upstream (research and development, design) and downstream (marketing, sales and service) costs as well as manufacturing costs. This expanded focus means careful attention to product design, since design decisions lock in most subsequent life-cycle costs. See Chapter 13 for coverage of life-cycle costing. Benchmarking Benchmarking is a process by which a firm identifies its critical success factors, studies the best practices of other firms (or other business units within a firm) for achieving these critical success factors, and then implements improvements in the firm’s processes to match or beat the performance of those competitors. Benchmarking was first implemented by Xerox Corporation in the late 1970s. Today, many firms use benchmarking. Some firms are recognized as leaders, and therefore benchmarks, in selected areas—for example, Nordstrom in retailing, Ritz-Carlton in service, the Boeing Company in manufacturing, and Apple in innovation, among others. Benchmarking efforts are facilitated today by cooperative networks of noncompeting firms that exchange benchmarking information. For example, the International Benchmarking Clearinghouse (www.apqc.org) and the International Organization for Standardization (ISO) (www.iso.org) assist firms in strategic benchmarking. Business Process Improvement Whether you think you can or whether you think you can’t—you’re right. Henry Ford Henry Ford realized that the right attitude is important to success. That belief is what continuous improvement is all about. Business process improvement (BPI) is a management method by which managers and workers commit to a program of continuous improvement in quality and other critical success factors. Continuous improvement is very often associated with benchmarking and total quality management as firms seek to identify other firms as models to learn how to improve their critical success factors. While BPI is an incremental method, business process reengineering (BPR) is more radical. BPR is a method for creating competitive advantage in which a firm reorganizes its operating and management functions, often with the result that positions are modified, combined, or eliminated. Page 15 Total Quality Management Total quality management (TQM) is a method by which management develops policies and practices to ensure that the firm’s products and services exceed customers’ expectations. This approach includes increased product functionality, reliability, durability, and serviceability. Cost management is used to analyze the cost consequences of different design choices and to measure and report the many aspects of quality, including, for example, production breakdowns and production defects, wasted labor or materials, the number of service calls, and the nature of complaints, warranty costs, and product recalls. Lean Accounting Firms that have adopted lean manufacturing, which is one of the six key aspects of the contemporary business environment, will also typically use lean accounting. Lean accounting uses value streams to measure the financial benefits of a firm’s progress in implementing lean manufacturing. Lean accounting places the firm’s products and services into value streams, each of which is a group of related products or services. For example, a company manufacturing consumer electronics might have two groups of products (and two value streams)—digital cameras and video cameras—with several models in each group. Accounting for value streams can help the firm to better understand the impact on profitability of its lean manufacturing improvements. TQM and lean accounting are covered in Chapter 17. The Theory of Constraints The theory of constraints (TOC) is a methodology that improves profitability and cycle time by identifying the bottleneck in the operation and determining the most profitable product mix given the bottleneck. TOC helps to eliminate bottlenecks—places where partially completed products tend to accumulate as they wait to be processed in the production process. In the competitive global marketplace common to most industries, the ability to be faster than competitors is often a critical success factor. Many managers argue that the focus on speed in the TOC approach is crucial. They consider speed in product development, product delivery, and manufacturing to be paramount as global competitors find ever-higher customer expectations for rapid product development and prompt delivery. TOC is covered in Chapter 13. Sustainability Sustainability means the balancing of the organization’s short- and long-term goals in all three dimensions of performance—social, environmental, and financial. We view it in the broad sense to include identifying and implementing ways to reduce cost and increase revenue as well as to maintain compliance with social and environmental regulations and expectations. This can be accomplished through technological innovation and new product development as well as commonsense measures to improve the social and environmental impacts of the company’s operations. Ford Motor Company saves money through improvements in its stormwater draining system at its River Rouge, Michigan, plant; other leaders in sustainability include Toyota and Honda, McDonald’s, and Walmart, among many others. The Dow Jones Sustainability Indices (www.sustainability-indices.com/) identify and rank companies according to their sustainability performance. Sustainability is a key topic and is covered in each chapter; look for the sustainability icon next to problems involving this management technique. Enterprise Risk Management Enterprise risk management (ERM) is a framework and process that organizations use to manage the risks that could negatively or positively affect the company’s competitiveness and success. Risk is considered broadly to include (1) hazards such as fire or flood; (2) financial risks due to foreign currency fluctuations, commodity price fluctuations, and changes in interest rates; (3) operating risk related to customers, products, or employees; and (4) strategic risk related to top management decisions about the firm’s strategy and implementation thereof. For financial service firms particularly, ERM has become a much more important topic since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010), which requires new regulations for these firms. To indicate how widely used ERM has become, a survey of more than 1,000 risk management professionals by the Risk Management Society (RIMS) found that 63% of the organizations surveyed (www.rims.org/aboutRIMS/Newsroom/News/Pages/2013RIMSERMSurveyNowAvailable.aspx) either had an ERM Page 16 program in place or were currently implementing one. A recent survey of 100 senior finance executives by the American Productivity and Quality Center (APQC) indicates that only one in five of the executives were satisfied with their company’s corporate risk management systems (September–October 2013 issue of Supply Chain Management Review). So while there has been progress in risk management, there is apparently continuing room for improvement (www.apqc.org). The text explains the role of ERM in Chapters 10, 11, and 12. Standardized Rubrics Template BUSI 601 For Discussion Board Postings Original –Forum 1 80 points Criteria Levels of Achievement Advanced Proficient Developing Content 70% Management Technique Evaluation Appropriateness of Technique Synthesis Positive Force of Technique 4 points Thread clearly specifies the company, the industry, and the management technique to be analyzed 12 to 11 points Technique appropriate for company, description developed and includes adequate details detailed correlation between technique and company 12 to 11 points Thread describes how the technique selected will be a positive force for the company and provides appropriate examples. One or two examples provided 3 points Thread clearly specifies the company and industry but not the technique 2 to 1 points Company identified but not the industry 10 points Technique described but not in a detailed manner. Few details and no correlation 9 to 1 points Technique identified but no detail as how it applies to company 10 points Description of impact of technique to company but incorrect examples 9 to 1 points Description of impact of technique to company but no examples Not present 0 points Not present 0 points Not present 0 points Not present Originality Overall Content 28 to 26 points Thread conforms to the instructions. Content is well developed. Included originality of thought. Paragraph structure and flow is excellent. Analysis of the technique selected is provided. Questions are answered thoroughly and supported using substantial research data 25 to 24 Thread conforms to the instructions. 23 to 1 Content is organized based mainly on text little collaborating research data 0 points Not present Content is developed but lacks originality of thought. Too many direct quotations. Paragraph structure and flow is excellent. Analysis of the technique selected is provided. Minimal research sources used Structure 30% Grammar/Spelling and APA formatting Advanced 13 to 12 points No grammar or spelling errors Proficient 11 points Only one minor error and 1 APA error Text and Journal Support / 11 points Thread contains appropriate word count and content supported with text and relevant scholarly research data 10 to 9 points Thread contains appropriate word count and content not supported with text and relevant scholarly research data Developing 10 to 1 points Two grammar errors and at least 2 APA errors 8 to 1 points Thread had irrelevant scholarly sources and unsubstantiated opinion statements Not present 0 points Not present 0 points Not present
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Running head: STARBUCKS AND BUSINESS INTELLIGENCE

Starbucks and Business Intelligence
Name
Institution

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STARBUCKS AND BUSINESS INTELLIGENCE

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Starbucks and Business Intelligence
Starbucks is a beverage company serving high-end individuals with coffee. Business
analytic tools are essential in the company. Business intelligence enables the analytics devices to
work for the firm to get solutions for complex situations (Blocher et al., 2010). Starbucks
accounting department depends on big data so that they can serve their consumers diligently out
of information they get from the reports generated. In this case, they can know how they are
performing through the analysis of data. They use the sales numbers to predict the future as well
as predict the market trend. This has informed their choices, such as budgeting for the market.
Hence the option of using their social media as a method of communication is not a priority in
the company.
The big data analytics technics has contributed to the fact that the company has
concentrated in the store operations other than marketing their abilities on social media (Hajli, &
Laroche, 2019). The cost allocations, in this case, prioritize structures where people can meet and
have coffee instead. The online data in this particular case contributes significantly to the change
they need to implement in the same firm. An accountant can also use this method to look at the
past performance of the company, informing the cost allocations into the future about the
demands...

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